Naval Intelligence: Covert Tactics and Espionage History

Introduction: The Origins of Naval Intelligence

The history of naval espionage is as complicated as the conflicts that sparked the need for it. As world powers began to develop highly specialized naval forces, those navies came to play a crucial role in the collection of intelligence and the execution of covert actions — both during wars and during times of peace. Faced with German and Japanese naval threats, British and American naval forces moved into the intelligence field, eventually establishing naval intelligence agencies that proved crucial in collecting and acting on information during World War II, the Cold War, and beyond.

Navies were not always associated with intelligence gathering and covert strategy; the move into intelligence was a gradual one. Early in the United States Navy's history, there was a development of covert tactics designed to maneuver around stronger naval forces. "The United States Navy could deal effectively with a superior naval force […] by avoiding battle on the open sea, fighting instead in bays, sounds, and interior waterways," but also through the use of covert tactics.¹ Such thinking eventually led to the official formation of an intelligence unit under the control of the U.S. Navy. In 1882, the Navy "issued General Order No. 292, which established an office of intelligence within the Bureau of Navigation."² This was the official creation of a purely naval intelligence unit, aimed at using the Navy's resources for intelligence gathering purposes.

This unit remained active for over sixty years, well into World War II, until it was later replaced by the Office of Naval Intelligence. During this period, "strategic and technical information on foreign navies was collected from either open sources like newspapers, magazines, and public radio broadcasts or from the intelligence reports made by naval attachés, confidential agents, and the occasional accounts of American travelers."³ Early strategies were often far less innovative than what is used today, but they were still quite cutting-edge for the time. Such intelligence gathering kept the American Navy informed about other countries' naval activities.

German Naval Espionage in World War I

The United States was not the only nation developing intelligence units within the context of naval power. Germany is also notorious for its Navy's intelligence and espionage activities, which spanned from the beginning of the twentieth century into World War II. German espionage took center stage in both World War I and World War II through the German Navy's use of covert submarine warfare tactics. Germany had a long history of well-developed naval strategies dating back to the nineteenth century, and German naval technology had far surpassed American technology for years in the late nineteenth and early twentieth centuries.

Under the leadership of Admiral Alfred von Tirpitz, the once-small Prussian Navy became the Imperial Navy, dominating the Atlantic from the 1870s to the end of World War I in 1919.⁴ During this time, the German Navy developed highly sophisticated naval vessels, including the notorious U-boats — submarines that would come to dominate the Atlantic during World War I. German naval officers often focused on "strategic studies [that] traditionally considered hypothetical wars with Britain," but by 1897, "the emerging naval power of the United States prompted German naval staff officers to shift their focus to contingency planning for an American war."⁵ Not long after, Germany would have its chance to test the strategies crafted against both the British and American navies.

German naval intelligence was highly sophisticated and included a vast network of spies around the time of World War I.⁶ Their efforts targeted the British Navy in an attempt to evaluate the threat level and to sabotage British and American naval opposition to German interests in the Atlantic. A total of 31 German naval spies were arrested in Great Britain during World War I.⁷

During this time, the German Navy was conducting covert missions in the Atlantic using submarines. German U-boats posed a severe danger to British supply lines and to Atlantic boat traffic more broadly. Due to the aggressive tactics of the German Navy, "under extreme political pressure, Germany was forced to offer guarantees that U-boats would not endanger neutral shipping and would not attack passenger liners, even if they flew the flag of a belligerent nation."⁸ However, despite such guarantees, aggressive U-boat activity continued to plague ships in the Atlantic. German naval activity was so formidable that it posed enough of a threat to draw the United States into the European conflict. It was the sinking of the RMS Lusitania in May of 1915 that particularly enraged American forces and swayed public opinion toward entering the war in Europe to fight against Germany.⁹

German Naval Intelligence and the Enigma Breakthrough in World War II

The Germans continued to use their naval resources for intelligence and covert operations well into World War II. The German Navy had been heavily reduced after World War I, almost entirely dismantled by war treaties that required Germany to dramatically reduce its standing military. Nevertheless, the country began silently rebuilding its once-great navy during the 1920s, as officers "secretly purchased new naval vessels and weaponry" from Spain, Japan, and Sweden.¹⁰ As Hitler and the Nazi Party seized power, there was a renewed drive to increase the power of the German Navy. By the outbreak of World War II, the German Navy was again a serious threat to Allied forces.

Part of this threat was a highly sophisticated naval intelligence unit headed by Lieutenant Martin Braune. The unit had over 500 officers and 24 posts engaged in gathering communications intelligence throughout the Atlantic.¹¹ Additionally, "there were also intelligence officers aboard every German warship," which dramatically expanded Germany's naval intelligence capabilities.¹²

Still, there were developments that allowed European and American powers to combat the powerful German Navy. One major breakthrough just before the outbreak of World War II was the British acquisition of Enigma codes. According to the research, "the British anti-shipping campaign against the German naval operations could not have been a success without the employment of five types of intelligence: photographic, agents, diplomatic, ordinary SIGINT, and Enigma."¹³ The Enigma machine was a coding device used by the Germans to encode crucial strategic messages. British intelligence officers acquired an Enigma machine from Polish cryptologists working with the Polish Cipher Bureau in 1939.¹⁴ Ultimately, this breakthrough helped the British and American navies fight back against the formidable German Navy during World War II.

Cold War Covert Operations: Ivy Bells and Lemon-Aid

The need for the Navy's communications intelligence was heightened during the intense years of the Cold War. During this period, the United States Navy conducted a number of highly secret missions to gather intelligence on the Communist Soviet superpower. Russia maintained a powerful navy of its own, and the U.S. Navy played a crucial role in countering Soviet attempts to acquire critical information about American activities and strategies.

One of the most successful of these covert missions was called Operation Ivy Bells. Working with the CIA and the National Security Agency (NSA), the Navy helped tap into a crucial Russian communications pipeline in the Sea of Okhotsk. Sometime in the 1960s, the Russians had built an underwater communications cable in the region near the southeastern portion of Russia, just north of Japan.²² During this period, the United States was seeking any information that would reveal Russia's nuclear capabilities and potential striking abilities. In 1971, the Navy participated in a joint effort to tap the communications cable. The USS Halibut was commissioned deep into Communist waters to install a device that wrapped around the 400-foot cable and monitored communications passing through it.²³ The mission was highly secretive; many of the sailors participating in it were unaware of exactly what they were doing.

The cover story — that the USS Halibut had been sent to recover debris from the Russian SS-N-12 Sandbox anti-ship missile — was in fact also true, as the Navy did gather missile fragments for further investigation. Thus, the mission was multi-faceted both in its purpose and in its inherent secrecy. It proved enormously successful, opening up Russian Communist communications to American analysts. The device planted on the cable was nuclear-powered and could store vast amounts of data. It was replaced periodically by similar missions conducted by other submarines, including the USS Parche and the USS Seawolf. The communications breach lasted nearly a decade and was not discovered by the Soviets until 1981, when former NSA worker Ronald Pelton tipped them off about its existence.²⁴ Those ten years of communications monitoring yielded substantial intelligence data, and the Navy's role in maintaining the project was crucial during the volatile period of the Cold War.

Another successful covert operation in which the U.S. Navy participated was Operation Lemon-Aid. Rather than gathering intelligence, this operation aimed to confuse Soviet intelligence gathering inside the United States in the late 1970s. The Soviets had begun recruiting NSA, CIA, and Navy officers and staff to work as secret agents, selling U.S. secrets for cash. A number of top Navy officers fell into the scheme, often motivated by dissatisfaction with their pay. One of the most notorious cases was that of John Walker. In 1976, Walker retired after more than twenty years of service in the Navy and was subsequently lured by Soviet payments to sell U.S. secrets and to recruit other active Navy officers into a spy ring that would damage the Navy's reputation.²⁵ For nearly a decade, Walker worked against the very country he had served — until his ex-wife alerted naval authorities.